Bocom Intl estimates that Flat Glass (06865) gross margin in Q2 will increase by 1-2 percentage points compared to the previous quarter.
According to the research report released by Bocom Intl on the Zhongtong Finance app, due to weaker-than-expected trends in the price of photoelectric glass, profit forecasts have been lowered. The target price of Flat Glass (06865) has been lowered from HKD 19.5 to HKD 13.1, down 32.8%. Since the bank downgraded its rating to "Neutral" in March, the stock price has fallen by more than 40%. The bank believes that the valuation is attractive and has upgraded its rating to "Buy".
The bank estimates that the company's gross margin in Q2 will increase by 1-2 percentage points compared to the previous quarter, with a small decrease in sales and basically flat profits. Currently, the prices of 2mm and 3.2mm photoelectric glass have fallen by 16.4% and 7.6%, respectively, compared to April. The bank calculates that at current prices, except for Flat Glass and Xinyi Glass (00868), other companies are already losing money. The bank expects the industry's expansion rate to slow significantly and a large-scale cold repair wave is expected to arrive, making further price declines very limited.